Bankers set out reforms ahead of G20
Leading figures from the world of banking last night set out how their industry should change, including reforms to pay, ahead of this week's G20 conference in Pittsburgh.
Politicians including President Barack Obama and Gordon Brown will be seeking agreements on reshaping the global financial services industry.
Stephen Green, chairman of HSBC, said: "Overall, we have to be sensitive to the public mood if we are going to restore the public trust that the vast number of hard working and entirely ethical professionals in our sector deserve."
Marcus Agius, chairman of Barclays, said: "A healthy banking industry is supportive of international trade which drives wealth creation around the world for the benefit of developed and developing nations alike: it is one of banking's principal social purposes."
Lord Turner, chairman of the Financial Services Authority, recently described banks as "socially useless".
Bankers also fear an emerging international consensus on pay and bonuses could be derailed by domestic politics, particularly in the UK where the annual party conference season began this weekend.
Labour raised the temperature again yesterday when Lord Myners, the City Minister, attacked "unacceptable" bonuses, while President Obama warned there was still "a lot to do" to strengthen financial market rules.
However, senior bankers from both sides of the Atlantic yesterday insisted the way bankers are paid could be regulated but the amount paid should be set by the market.
In a statement to The Sunday Telegraph from a spokesman, Lloyd Blankfein, chairman and chief executive of Goldman Sachs, said: "Compensation schemes should discourage inappropriate risk-taking and bonuses should be directly linked to the performance of the company as a whole, not to the profit and loss performance of any individual. Senior employees should receive the bulk of any bonus payment in equity that vests over a period of years, and they should be required to hold a significant portion of their equity awards until retirement."
Mr Agius said it was the responsibility of employers to pay staff the minimum required consistent with attracting and retaining top talent and paying people fairly.
"We operate in a global market. It's proper in terms of human equity that people can transfer their labour, so employees are mobile. And those who are most talented, those who genuinely add value, are naturally the most in demand
"I'm absolutely convinced that structures exist, and that the will exists, to ensure that in the future we don't pay for failure but that we do pay for success. There is an emerging international consensus around the architecture of pay, such as the need to risk-adjust profits so they're real profits, more deferral of bonuses and bonuses paid more in shares than cash."
Mr Green said that an effective labour market in financial services required three effective working parts. Competition, transparency and balance.
"On the first count, there is no doubt that competition is more than healthy in the sector. On the second, transparency clearly needs to improve; opaque and highly complex reward structures will not build public confidence, and we support the principles of the Walker review here. On the third part, balance, we simply cannot allow the previous distortions between remuneration and shareholder interest." He said there was no doubt excessive risks had been taken and that compensation structures had contributed. "Multiple year guarantees, for example, should not be allowed to return."
Angela Knight, chief executive of the British Bankers Association said: "Changes have been made and more are being made right now. We need ministerial support. There is inevitably going to be quite a lot of politics in the party season but the banking industry is helping to drive the economy and that needs to be properly recognised by politicians."
Stephen Green, chairman of HSBC, said: "Overall, we have to be sensitive to the public mood if we are going to restore the public trust that the vast number of hard working and entirely ethical professionals in our sector deserve."
Marcus Agius, chairman of Barclays, said: "A healthy banking industry is supportive of international trade which drives wealth creation around the world for the benefit of developed and developing nations alike: it is one of banking's principal social purposes."
Lord Turner, chairman of the Financial Services Authority, recently described banks as "socially useless".
Bankers also fear an emerging international consensus on pay and bonuses could be derailed by domestic politics, particularly in the UK where the annual party conference season began this weekend.
Labour raised the temperature again yesterday when Lord Myners, the City Minister, attacked "unacceptable" bonuses, while President Obama warned there was still "a lot to do" to strengthen financial market rules.
However, senior bankers from both sides of the Atlantic yesterday insisted the way bankers are paid could be regulated but the amount paid should be set by the market.
In a statement to The Sunday Telegraph from a spokesman, Lloyd Blankfein, chairman and chief executive of Goldman Sachs, said: "Compensation schemes should discourage inappropriate risk-taking and bonuses should be directly linked to the performance of the company as a whole, not to the profit and loss performance of any individual. Senior employees should receive the bulk of any bonus payment in equity that vests over a period of years, and they should be required to hold a significant portion of their equity awards until retirement."
Mr Agius said it was the responsibility of employers to pay staff the minimum required consistent with attracting and retaining top talent and paying people fairly.
"We operate in a global market. It's proper in terms of human equity that people can transfer their labour, so employees are mobile. And those who are most talented, those who genuinely add value, are naturally the most in demand
"I'm absolutely convinced that structures exist, and that the will exists, to ensure that in the future we don't pay for failure but that we do pay for success. There is an emerging international consensus around the architecture of pay, such as the need to risk-adjust profits so they're real profits, more deferral of bonuses and bonuses paid more in shares than cash."
Mr Green said that an effective labour market in financial services required three effective working parts. Competition, transparency and balance.
"On the first count, there is no doubt that competition is more than healthy in the sector. On the second, transparency clearly needs to improve; opaque and highly complex reward structures will not build public confidence, and we support the principles of the Walker review here. On the third part, balance, we simply cannot allow the previous distortions between remuneration and shareholder interest." He said there was no doubt excessive risks had been taken and that compensation structures had contributed. "Multiple year guarantees, for example, should not be allowed to return."
Angela Knight, chief executive of the British Bankers Association said: "Changes have been made and more are being made right now. We need ministerial support. There is inevitably going to be quite a lot of politics in the party season but the banking industry is helping to drive the economy and that needs to be properly recognised by politicians."
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